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Don't be taken in by charity scams

Consumer Reports News: July 19, 2013 03:08 PM

The Coalition Against Breast Cancer sounds like a charity worthy of your support. And a lot of donors felt the same way, contributing millions of dollars to the group. But just because an organization has a worthwhile name, doesn't mean it's doing much, if anything, to further its charitable cause.

Saying that the coalition was nothing more than a sham being used by one of the state's largest professional fundraising firms, New York Attorney General Eric T. Schneiderman recently obtained a court order requiring the firm to pay $3.1 million in restitution. The recovered money, which is in addition to a separate $1.55 million judgment against the defunct charity's directors in April, will be distributed to legitimate organizations that fight breast cancer, Schneiderman said.

The case is just one of numerous actions states have been taking recently against charities and fundraising firms that officials say misused money donated for charitable causes. They underscore why it's as improtant as ever to check out charity before giving.

Here are some other recent cases:

• A Florida-based non-profit group has agreed to stop charitable solicitations in Ohio and pay a $44,000 fine after that's state's attorney general, Mike DeWine, accused it of collecting $19,000 in recycled clothing and diverting most of the money to a for-profit business. The money was supposed to be used for environmental causes.

•A New Jersey court has approved a settlement that will designate a new administrator to distribute an estimated $334,000 in contributions to the Hurricane Sandy Relief Foundation. The state had accused two of the group's principals with diverting more than $13,000 in donations to their personal accounts and misrepresenting that contributions to the group were tax deductible. Under the agreement, the group will be dissolved after the remaining amount is distributed.

• Arkansas Attorney General Dustin McDaniel has filed a lawsuit against a New Jersey-based non-profit group and its Arkansas-based fundraising partner, accusing them of misleading the public into believing that donated money would be used to benefit the state's emergency responders. Of the more than $231,000 raised in the state, only $500 went to charitable purposes, McDaniel alleged. The complaint says that telemarketers misrepresented themselves as police officers, firefighters, or other first responders.

Avoid professional fundraisers. If a telemarketer calls you soliciting a donation, hang up. You need time to research the group. And by giving directly to the charity, you can avoid having a piece of your donation go to the fundraising firm.

• Consider giving through a federation. A fund-raising federation, such as the United Way, screens participating charities for you. That can be especially helpful if you're considering giving to a local organization that hasn't been evaluated by a charity watchdog.

Be extra careful during emergencies. The suffering caused by earthquakes, tornadoes, floods, and other catastrophic events demands immediate help. But emergencies also bring out scam artists out to make a quick buck by creating bogus groups. Even if it's a legitimate charity, a particular group may not be in position to help in a given emergency. Often government websites list charities that are or will be providing relief in the current crisis. Or stick with well-known organizations, such as the American Red Cross. For more advice on giving during emergencies, read the Consumer Reports Money Adviser story "How to help disaster victims".